Growth, Change in Air at Brazils TV Cidade

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Rio de Janeiro, Brazil -- Feisty Brazilian cable upstart TV
Cidade is aiming to push further into the northeastern part of the country as it balances
a new CEO and a new equity partner.

The operator said it expects to acquire a cable license for
the metropolitan area of Recife, one of Brazil's largest cities, this month.

If approved by regulators, the purchase will give TV Cidade
580,000 additional TV homes in the northeast part of Brazil. The company is expanding
there because it's a sparsely cabled market with little or no competition.

The Recife deal would give TV Cidade a total of 14 licenses
as it aims to become a bigger player in Brazil's 2.7 million-home cable-TV market.

However, the deal is a somewhat complicated one. TV Cidade
is buying the license from a group of investors that includes local newspaper publisher
and radio-station owner Diários Associados, which will become a new equity partner in TV
Cidade. According to TV Cidade programming director Silvia Jafet, Diários Associados will
replace debt-ridden newspaper Jornal do Brasil.

The deal also follows the departure of TV Cidade president
Roger Karman, who resigned last month following disagreements with some TV Cidade
partners, according to a source. He has been replaced temporarily by Ricardo Diaz Pereira,
who was TV Cidade's finance director at one time.

TV Cidade, which has acquired all of its licenses over the
course of this year, expects to begin providing service in September or October.

Brazil's cable market is about two-thirds controlled by
Globocabo, the pay TV unit of Brazilian media conglomerate Organizaçoes Globo.

TV Cidade may join forces with Globocabo, however. The two
companies are negotiating an agreement under which TV Cidade would buy programming from
Globo and market its service to customers under the marquee of Net, the brand name of
Globocabo's pay TV service.

If TV Cidade fails to reach an agreement with Globocabo,
the company plans to join programming- and equipment-purchasing cooperative Neo TV, which
No. 2 pay TV company TVA is a member of.

Brazil's National Telecommunications Agency still must
approve the Recife deal, and it's unclear when the agency will reach a decision.

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